The NFL Goes Back to the Eighth Circuit

The decades-old battle between the NFL and its players is returning to the Eighth Circuit this morning, when the NFL Players Association will ask a three-judge panel to reinstate its lawsuit against the teams and their owners for secretly setting a salary cap for the 2010 season, which was supposed to be uncapped.

In 1993, the players and the NFL entered into a settlement agreement in White v. NFL that governed the league’s labor relations until 2011. That agreement allowed the NFL to set a salary cap, but it also provided that the “Final League Year”–the season before the agreement expired–would be uncapped. The theory was that the owners’ fear of a salary-cap free season would entice them to extend the agreement into perpetuity.

It seemed to work. The two sides extended the agreement in 1996, 1999, 2002, and 2006. But a few years after the last extension, the NFL announced that it wasn’t going to play that game anymore; it was letting the agreement expire in the spring of 2011, meaning that the 2010 season would be uncapped.

Or at least it was supposed to be. The players now allege that the owners agreed to a secret $123 million salary cap during the 2010 season. There were a few rogues, as there often are. The Redskins, Cowboys, Raiders, and Saints exceeded the unspoken payroll limit by$103 million, $53 million, $41 million, and $36 million, respectively. But the league later punished those teams by taking salary-cap space from worst offenders (the Redskins and the Cowboys) for the 2011 and 2012 seasons and evenly distributing that amount to every other team, except the Raiders and Saints.

After the NFL doled out the punishments, some of the other owners were blunt about the reason. New York Giants ownerJohn Mara saidthat the Redskins and Cowboys had violated “the spirit of the salary cap” because they “attempted to take advantage of a one-year loophole”–meaning the 2010 uncapped season.

So the players might have a case–if they can ever get to the merits. When the owners locked out the players after the 2011 season, the players disbanded their union and filed another antitrust action (Brady v. NFL). The district court sided with players by enjoining the lockout, but the Eighth Circuit reversed and as a result the players and owners entered into a new collective bargaining agreement. As a condition of that agreement, the owners made the players file a stipulated dismissal in the White v. NFL class action, which stated that the players and their association agreed to dismiss all potential claims for any breach of the 1993 agreement “known and unknown, whether pending or not.”

That dismissal includes the claim that the owners wrongly conspired to set a salary cap for the 2010 season, so the district court dismissed the players’ claim. And that’s the issue the Eighth Circuit panel (Chief Judge Riley and Judges Wollman and Shepherd) will hear today.

The players argue that because the White case was a class action (meaning that some of the plaintiffs weren’t directly represented), the dismissal of all claims related to the 1993 White settlement couldn’t happen unless and until the district court held a fairness hearing and approved it under Rule 23(e).

The parties’ briefs are linked below. The case will likely be decided sometime before the 2014 season begins. If the Eighth Circuit reverses and sends the case back to district court, the NFL will face a potential $3 billion judgment.